Is Starbucks Corporation (NASDAQ:SBUX) undervalued? Money managers are betting on the stock. The number of bullish hedge fund bets advanced by 3 recently.
If you’d ask most market participants, hedge funds are viewed as underperforming, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the elite of this group, around 450 funds. It is estimated that this group has its hands on the majority of the hedge fund industry’s total asset base, and by tracking their top equity investments, we have figured out a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as integral, bullish insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are a variety of motivations for an executive to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).
With all of this in mind, it’s important to take a peek at the recent action surrounding Starbucks Corporation (NASDAQ:SBUX).
How are hedge funds trading Starbucks Corporation (NASDAQ:SBUX)?
Heading into 2013, a total of 46 of the hedge funds we track were long in this stock, a change of 7% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.
Of the funds we track, SAC Capital Advisors, managed by Steven Cohen, holds the largest position in Starbucks Corporation (NASDAQ:SBUX). SAC Capital Advisors has a $188 million billion position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Donald Chiboucis of Columbus Circle Investors, with a $150 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include James Crichton and Adam Weiss’s Scout Capital Management, John Lykouretzos’s Hoplite Capital Management and Doug Silverman’s Senator Investment Group.
Consequently, some big names were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, initiated the most valuable position in Starbucks Corporation (NASDAQ:SBUX). Renaissance Technologies had 75 million invested in the company at the end of the quarter. Jacob Doft’s Highline Capital Management also initiated a $38 million position during the quarter. The other funds with brand new sbux positions are Roberto Mignone’s Bridger Management, Dmitry Balyasny’s Balyasny Asset Management, and Robert Karr’s Joho Capital.
Insider trading activity in Starbucks Corporation (NASDAQ:SBUX)
Bullish insider trading is at its handiest when the company in question has seen transactions within the past six months. Over the latest six-month time frame, Starbucks Corporation (NASDAQ:SBUX) has experienced zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
With the results exhibited by our strategies, everyday investors must always monitor hedge fund and insider trading sentiment, and Starbucks Corporation (NASDAQ:SBUX) is an important part of this process.
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